Chapter 5
Leveraging Business Analytics to Lower Total Cost of Occupancy
10 High-Impact Moves to Reduce Total Cost of Occupancy
5 Minute Read
Invest in holistic, “single pane of glass” portfolio analytics to drive transparency to lines of business and uncover new cost-savings initiatives.
Corporate Real Estate & Facilities (CRE&F) leaders require integrated analytics to mine total cost of occupancy (TCO) reduction opportunities.
The challenge for most CRE&F teams, however, is that portfolio data is often distributed across various enabling technologies, service providers and global regions. CRE&F leaders struggle with a “patchwork quilt” of reports and analytics, making a single view of TCO a pipe dream.
Through secure data integration, standardized processes, data governance and comprehensive analytics, CRE&F leaders now can produce greater insights into occupancy costs at the global, regional and facility level—all filterable by Line of Business (LOB).
CRE&F leaders can make better decisions when they have a single view of occupancy, expense, capital projects and operations data. When TCO can also be filtered by LOB, it can be extremely beneficial for strategic decision-making with each business segment.
Understanding total cost of occupancy is critical for our clients to truly analyze the complete picture and health of their portfolios, ensuring they’re making impactful business decisions with timely and complete information.
How to Begin?
Working with Finance, Technology and Tier 1 service providers, CBRE’s Business Analytics team recommends the following approach:
- Centralize financial data across service lines, technologies, reporting systems and data warehouses to provide a consolidated view of operating costs across the portfolio.
- Memorialize cost centers at a regional, property, general ledger category, general ledger account name and/or financial reporting period level.
- Summarize budget versus actual spend on depreciation, facilities management services, internal salary and travel, large and small projects, property tax, rent/lease costs and utilities.
Although TCO can be calculated manually, it is labor intensive. Accordingly, most CRE&F organizations only undertake the process on a quarterly or annual basis. This makes it challenging to leverage TCO insights to drive ongoing strategy.
Companies that have automated the TCO process through dashboards (whereby information is updated regularly) bring visibility to an otherwise opaque process, making it possible to easily identify variances, accurately calculate cost-saving opportunities and quantify the potential financial impacts of site closures or reductions in square footage.
TCO also facilitates capital planning efforts, helping to empower CRE&F teams with consolidated information on historical spend, making it easy to ensure equitable year-over-year investment and distribution of annual capital budgets.
Why Now?
Faster identification of emerging patterns and priorities, coupled with higher credibility with LOB stakeholders on CRE&F issues, is highly valued in today’s corporate climate.
Building comprehensive and timely business cases for transformation, and then delivering those initiatives, will require both integrated TCO analytics and PIMO resources.
High-Impact Example:
Tech/Media/Communications Corporation: Integrated analytics was vital in deciding which sites to divest after a merger of two large-cap telecommunications corporations. The PIMO team was instrumental in implementing the plan, resulting in $50 million in savings via closure of certain retail, corporate and critical facilities, as well as a record two-month turnaround time for complete post-merger rebranding.
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